Digital Asset Broker Reporting Practice for 2026 Filers

By Leo Kincaid, Contributing Writer
Reviewed by Dana Whitfield, CPA, for technical accuracy
This article covers United States federal tax rules only. State tax treatment of digital assets varies and is not addressed here.

Answer

Digital asset broker reporting works in practice through a phased rollout of Form 1099-DA: brokers reported gross proceeds on 2025 transactions starting with forms sent in early 2026, and they add cost-basis reporting for 2026 transactions on forms sent in 2027. Taxpayers still must reconcile broker forms against their own records, because many 1099-DA forms will arrive with incomplete or missing basis data for years to come.

Most people assume that once a broker sends a 1099-DA, the basis math is done. That assumption is wrong for a large share of filers, and it will stay wrong for at least the next two tax seasons.

Why This Changed: A Short Regulatory Timeline

Congress added digital assets to the broker information-reporting regime under Internal Revenue Code Section 6045 through the Infrastructure Investment and Jobs Act, enacted in November 2021. That law directed the Treasury Department to treat certain digital asset intermediaries as “brokers” for tax reporting purposes, the same status long held by stock and bond custodians.

It took nearly three years to turn that directive into working rules. Treasury and the IRS released final regulations on June 28, 2024, establishing Form 1099-DA as the reporting vehicle and setting a phased effective-date schedule rather than a single flip-the-switch date.

Two weeks later, on July 15, 2024, the IRS issued Notice 2024-57, carving out six categories of digital asset activity from near-term reporting. The agency said it needed more time to study them.

What Brokers Must Report Under Section 6045

The final regulations define “broker” broadly for digital asset purposes. The category includes custodial exchanges, digital asset kiosks, and certain payment processors that regularly stand between a buyer and a seller in a way that lets them know the identity of the party making the sale.

Two groups get a later start date. Real estate professionals who handle closings involving digital asset payments must report fair market value for closings dated on or after January 1, 2026. Non-custodial platforms, including most decentralized exchange interfaces, are not yet swept into these rules; Treasury has said additional guidance for them will come separately.

Digital Asset Kiosks and Payment Processors

The broker definition reaches further than most people expect. Digital asset kiosks, the crypto equivalent of a Bitcoin ATM, count as brokers when they let a customer exchange digital assets for cash or for other digital assets. Certain payment processors that route digital asset payments between a merchant and a buyer count too, under the label “digital asset payment processor,” or PDAP.

Wallet software providers that never take custody of a customer’s assets and never see both sides of a trade generally fall outside the definition. That distinction, custody and visibility into both parties, does most of the work in deciding who has to file.

The Phase-In: Proceeds First, Basis Second

Brokers report two distinct pieces of information, and they arrived on different clocks.

• Gross proceeds from a sale or exchange, required for transactions on or after January 1, 2025, reported on forms mailed in early 2026.
• Cost basis and acquisition date, required for transactions on or after January 1, 2026, reported on forms mailed in early 2027.

That gap matters. Anyone who sold digital assets in 2025 will receive a 1099-DA showing what they got for the sale, without a broker-reported basis figure to subtract from it. The taxpayer, not the broker, carries the burden of proving basis for that first reporting year.

Penalty Relief for the First Reporting Year

The IRS acknowledged that brokers were building new reporting systems from scratch. For 2025 transactions, the agency said it would not impose failure-to-file or failure-to-furnish penalties on a broker that made a good-faith effort to comply, even if the resulting Form 1099-DA had errors.

That relief runs to brokers, not to taxpayers. An individual filer gets no matching grace period for underreporting gain, so leaning on “the form was probably wrong anyway” is not a defensible filing position.

Backup Withholding and TIN Matching During the Transition

Section 6045 broker rules also carry backup withholding exposure: a broker can be required to withhold a flat percentage of proceeds when a customer hasn’t provided a valid taxpayer identification number. The transition guidance softens this for 2026, giving relief to brokers that collect a customer’s TIN and get it confirmed through the IRS’s TIN-matching program before a sale settles.

Additional withholding relief continues for NFT dispositions and PDAP sales specifically, pending further guidance, since those categories still have open questions about how proceeds should even be calculated.

The Forms Involved: 1099-DA, Form 8949, and the Notices That Carve Out Exceptions

Form 1099-DA, “Digital Asset Proceeds From Broker Transactions,” is the new information return. It sits alongside Form 8949, which taxpayers already use to list individual sales of capital assets and calculate gain or loss.

Nothing about 1099-DA replaces Form 8949. A taxpayer still lists each disposition there, still applies the correct holding period, and still attaches the resulting Schedule D. The new form simply changes who is telling the IRS what, and when.

Six Transaction Types Still Outside 1099-DA Reporting

Notice 2024-57 pushed six activity types out of near-term reporting because the IRS said it needed more time to study how to characterize them. Brokers do not have to file Form 1099-DA for these until further guidance arrives:

1. Wrapping and unwrapping digital assets across blockchains
2. Providing liquidity to automated market maker pools
3. Staking transactions tied to proof-of-stake validation
4. Lending digital assets under an obligation to return the same type
5. Short sales of digital assets
6. Notional principal contract transactions

Being outside broker reporting does not mean being outside tax reporting. A taxpayer who stakes, lends, or shorts digital assets still owes tax on any resulting gain. They just cannot lean on a 1099-DA to document it.

De Minimis Thresholds by Transaction Type

Not every transaction gets individual line-item reporting. The rules set different reporting floors depending on what changed hands.

Below these thresholds, a broker can aggregate transactions rather than list each one separately. That aggregation creates its own reconciliation headache, addressed below.

What Taxpayers Must Reconcile

Receiving a 1099-DA is the easy part. Matching it to what actually happened in an account is where filers run into trouble.

Missing or Partial Basis

Expect gaps in broker-reported basis in several common situations: assets transferred in from another exchange or from self-custody, assets purchased before the broker’s basis-tracking window opened, and holdings in crypto exchange-traded products structured as grantor trusts, most of which do not issue a traditional 1099-B or 1099-DA with basis at all.

In every one of these cases, the taxpayer needs their own contemporaneous purchase records. Exchange trade confirmations, wallet transaction histories, and dated screenshots all count. Waiting until the broker form arrives to reconstruct that history is backwards.

Specific Identification Versus FIFO

Two methods survive the transition. First-in, first-out treats the oldest unit in an account as the one sold, applied automatically by most brokers unless a customer instructs otherwise. Specific identification lets a taxpayer designate exactly which lot they’re selling, which matters enormously when lots were bought at very different prices.

Custodial brokers require advance notice to honor specific identification, generally before the trade settles rather than after. A taxpayer who wants to pick the highest-cost lot to minimize a gain, or the lowest-cost lot to bank a loss on purpose, has to set that instruction with the broker ahead of time. Waiting until tax season and asking the broker to relabel a trade after the fact usually doesn’t work, and taxpayers who assume it will are setting themselves up for a FIFO result they didn’t choose.

Average cost basis, common in traditional mutual funds, has a narrower lane here. It’s available for tokenized mutual funds and similar pooled products, not for native crypto tokens held directly.

The Universal Method Had to Go

Before 2025, many taxpayers used a “universal” cost-basis method, pooling basis across every wallet and exchange account they held and drawing from that single pool whenever they sold. The final regulations do not permit that going forward. A taxpayer must now use either specific identification or a first-in, first-out default, tracked separately for each wallet or account.

Rev. Proc. 2024-28 gave a one-time bridge: taxpayers could make a reasonable allocation of their existing pooled basis across specific wallets and accounts, with a safe-harbor deadline of January 1, 2025. Miss that window with no allocation on record, and the IRS’s treatment of the orphaned basis is genuinely unsettled; practitioners disagree about how forgiving an audit would be.

The universal method was a reasonable workaround back when broker systems could not track wallet-level basis. Treating it as something to keep using indefinitely, though, was never realistic, whatever a support article implied at the time.

Reconciling the 1099-DA Against Your Own Basis Records

Once a broker issues its 1099-DA, the taxpayer’s job is to line up every reported disposition against their personal ledger of purchases, transfers, and prior sales. That means checking each lot’s acquisition date, confirming which cost-basis method applied, and flagging any sale where the broker’s proceeds figure doesn’t match an account statement.

This is the same discipline required for crypto cost basis reporting generally, and the two tasks now overlap almost completely: a 1099-DA is only as good as the basis records sitting behind it. When the form is missing basis, which will be common through the 2026 filing season, the taxpayer’s own reconciliation becomes the primary source of truth, not a backup to it.

Keep source documents longer than feels necessary. Exchange trade histories disappear when accounts close or platforms shut down, and the IRS can examine a return for years after filing. A purchase confirmation from 2021 might be the only proof of basis available for a sale reported in 2027.

Worked Example: Reconciling a 2025 Sale

2025 Rules Versus 2026 Rules: What Actually Changed

Common Mistakes in Digital Asset Broker Reporting

A few errors show up again and again once real 1099-DA forms start landing in inboxes.

• Assuming a blank basis field means zero basis. A blank field means the broker doesn’t know the basis, not that there isn’t one. Reporting the full proceeds as gain is the single costliest mistake on this list.
• Double-counting NFT sales. IRS guidance says gross proceeds from a creator’s first sale of a specified NFT belongs only in one designated box. Some broker systems still populate two boxes for the same sale, and taxpayers who copy both figures onto Form 8949 overstate income.
• Reporting aggregated totals as single line items. Stablecoin and NFT sales under the de minimis thresholds often arrive as one combined number. The IRS still expects the underlying individual dispositions on Form 8949, not just the aggregate.
• Ignoring transactions on platforms that never issued a form at all. Decentralized exchange activity and most staking rewards fall outside current broker reporting. No form arriving does not mean no tax event occurred.
• Forgetting that a transfer between your own accounts isn’t a sale. Moving assets from one wallet to another you also control is not a disposition. Some taxpayers, confused by a 1099-DA reporting a transfer-in date, mistakenly treat the move itself as a taxable event.

A Practical Compliance Checklist

Before filing a return that includes digital asset sales, work through this list.

• Pull every 1099-DA received, plus statements from any platform that didn’t issue one.
• Confirm whether your basis allocation under Rev. Proc. 2024-28 was actually filed, not just planned, if you used the universal method before 2025.
• Match each disposition’s proceeds figure to an account statement before trusting it.
• Flag any lot with missing basis and locate the original purchase record yourself.
• Check aggregated stablecoin and NFT lines for individual transactions that need separate Form 8949 entries.
• Ask about crypto ETF holdings specifically; most don’t send the documentation you’d expect from a stock broker.
• If you want specific identification instead of FIFO for a future sale, set that instruction with your broker before you trade, not after.
• Keep raw exchange exports and wallet histories somewhere durable; a platform that closes down takes its transaction history with it.

Key Takeaways

• Form 1099-DA rolled out gross-proceeds reporting for 2025 sales and adds broker-reported basis for 2026 sales.
• A 1099-DA without a basis figure is normal for 2025 transactions, not a sign of broker error.
• The universal cost-basis method is gone; wallet-by-wallet or account-by-account tracking is now required.
• Six transaction types, including staking and lending, stay outside 1099-DA reporting under Notice 2024-57 until further guidance.
• Form 8949 is still the form that actually reports gain or loss, regardless of what a broker sends.

None of this settles down soon. Basis-reporting rules for non-custodial platforms are still coming, and every filing season through at least 2027 will bring another layer of broker data that taxpayers need to check rather than accept.

Frequently Asked Questions

Do I owe tax on crypto if my broker didn’t send me a Form 1099-DA?

Yes. Reporting obligations for brokers are separate from your obligation to report gains and losses. Many activities, including staking and decentralized exchange trades, currently generate no broker form at all, but the underlying gain is still taxable.

What happens if my 1099-DA shows proceeds but no cost basis?

You still need to report the sale on Form 8949 using your own basis records. Leaving the basis blank or treating the full proceeds as gain typically overstates what you owe.

When do brokers start reporting cost basis on Form 1099-DA?

For transactions occurring on or after January 1, 2026, with those forms reaching taxpayers in early 2027. Sales from 2025 generally show proceeds only.

Can I still use one combined basis pool across all my wallets?

No. The universal method ended for transactions after the Rev. Proc. 2024-28 safe-harbor deadline of January 1, 2025. Basis now has to be tracked wallet-by-wallet or account-by-account.

Are staking and lending transactions reported on Form 1099-DA?

Not yet. IRS Notice 2024-57 deferred staking, lending, short sales, wrapping, liquidity-pool transactions, and notional principal contracts from near-term 1099-DA reporting while the IRS studies how to treat them.

Does a Form 1099-DA cover transactions on decentralized exchanges?

Not currently. The final regulations focus on custodial brokers and similar intermediaries that can identify both sides of a trade. Treasury has indicated separate guidance for non-custodial platforms will come later, so decentralized exchange activity stays outside 1099-DA reporting for now.

What if my crypto ETF didn’t send me a 1099-DA or 1099-B?

Many spot crypto exchange-traded products are structured as grantor trusts, which typically report through a different mechanism than a standard brokerage 1099. Check the fund sponsor’s tax documents page for a grantor trust statement, and don’t assume the absence of a familiar form means no reporting obligation exists.

References

• Internal Revenue Service, “Final regulations and related IRS guidance for reporting by brokers on sales and exchanges of digital assets,” IRS.gov. Confirms the phased effective dates for gross proceeds and cost-basis reporting.
• Internal Revenue Service, “Frequently asked questions about broker reporting,” IRS.gov, updated October 30, 2025. Covers who qualifies as a broker and what information each Form 1099-DA box must contain.
• U.S. Department of the Treasury, press release on final digital asset broker reporting regulations, June 28, 2024. States the release date of the final Section 6045 regulations and summarizes the comment process behind them.
• Internal Revenue Service, Notice 2024-57, Internal Revenue Bulletin 2024-29, July 15, 2024. Lists the six transaction types deferred from near-term Form 1099-DA reporting.
• Internal Revenue Service, Revenue Procedure 2024-28, safe-harbor basis allocation for digital assets. Sets the January 1, 2025 deadline for reallocating pooled basis away from the universal method.
• The Tax Adviser, “Navigating the Form 1099-DA reporting maze,” AICPA & CIMA, 2026. Documents common reconciliation errors practitioners are seeing on early Form 1099-DA filings.
• AICPA & CIMA, “Digital asset safe harbor — Rev. Proc. 2024-28 FAQs.” Practitioner-facing explanation of the safe-harbor allocation mechanics for tax preparers.

This article reflects guidance available as of July 2026. Digital asset tax rules continue to evolve, particularly for non-custodial platforms and the six deferred transaction types; confirm current requirements with a qualified tax professional before relying on any figure above for an actual filing.